Large Deposit Needed to Begin Flight Training? *FYI*


Apparently a "terse" writer
Staff member
Looking back over the situation at Airline Training Academy, I think I should make the following statement:

If a flight school wants an inordinately large deposit before you begin training, walk, no run the other direction as fast as possible.

I really don't care if the flight school seems large, stable and growing, but do not by any means deposit more money into your account than your current flight program.

Airline Training Academy talked at length about purchasing new Seminoles (leased, I hear) even after 9/11 and seemed to be growing in a time of aviation stagnation. Many students took out Key Bank Loans and deposited as much as a required $60,000 towards training.

The chances of getting that money back may be slim to none.

Be extremely careful when it comes to depositing large amounts of money, no matter what the contract says about you being able to withdraw it if things go awry. In fact, I'd heavily suggest having your family lawyer review any contract before signing.

Many of the students at ATA had no idea that the school was under extreme financial pressures until they were escorted out of the building by security that morning.

Just FYI. Research research research.
It wasn't a "vitriolic" post, was it?

Sorry, a little insider joke.
Doug -

Part of the problem stems from the fact that ATA took the whole amount via electronic transfer.... the students never had any control over the money at all, and had no idea how much (or how little) was in their accounts, and when that money arrived. Many schools (like ours) take it in check-form disbursements from Key instead of electronic transfer. If a student wants to push back or move up a disbursement, all they have to do is ask, a call is made to Key, and POOF! It happens. The student actually sees the check, knows how much is on his/her account and when, etc. ATA got away from using Sallie Mae as much because they were put on a 6-disbursement schedule, as opposed to the standard 3-disbursement schedule. This way, ATA couldn't get their hands on as much money as fast.

Key is working on a plan to determine exactly how much of a student's loan was actually consumed by the student so they won't be held accountable for the entire amount of the loan.

Cessna Driver
Primarily the reason why I said "inordinate".

If a school wants a deposit for $6000 for private pilot training, that is reasonable.

However, if a school outright demands full payment for the full program immediately, there are too many other "pay as you go" or other alternatives that you can keep some control over your money.

If you have reservations about large deposits, for that type of money, they should be willing to work out an agreeable method.

$60,000 is a crapload of money to risk losing. Of course this is coming from a guy who'd take a "Louisville Slugger" to your windshield over $5.

I'm kidding I'M KIDDING!
Well, here is my question. I have about 25K on account at AF. And I have had that money on account for about 3 months now, and have been chewing through it all. I have been living off of that money since January too. They cut me a check every month on the 1st.

So now after having this money on account for over 3 months, I know I will get some crap for asking for a fat check from them for 25K. They will most likely say that I am required by Key Bank to leave that money on account at the school, but I am not sure if that is the case.

Any advice?

I personally think you should not pay until you have recieved the service! You would never call up a plumber give him your credit card number over the phone and wait for him to come and repair your leaky tap.
Yeah, good point there Iain. Flight training is such an expensive undertaking you want to make sure you are getting your money's worth for every lesson. Plus, if you fork all the money over to a school right away, they may not value your business or your training as much. However, if you pay as you go, your business will be valued and the school will most likely keep a close eye on your training to keep your business. And who knows, at a smaller school too they may even get to know you as a person and then hire you as an instructor or charter pilot when you are all done.

Doug, also a great post. I think you should even put this warning on the home page next to the civilian training thread for anyone just getting started in aviation.
Part of what got Key and the students from ATA in trouble was that Key was really loose with documentation. Key does not require that you keep all the $$$ there.... those are policies that are put into place by the individual flight schools. If you're not comfortable with the situation, ask for the money. If they want to know why, tell them. In the wake of the ATA debacle, nobody in this biz could blame you for your discomort.

BTW, I concur... great post, Doug. This whole ATA business has been a black eye for the flight school biz...

Cessna Driver
I was cranky when an FBO wanted $250 bucks down so I could get a block rate. Imagine if I had to put down 60 grand. I'd be calling somebody with a Louisville Slugger to negotiate for me.
That makes sense, but what about the places that give you fat discounts for block time? Of course, you won't get burnt as bad as the folks who paid $60K into ATA got, but if the FBO goes belly up and you've put down a grand, that's gonna hurt!
Most flight school I know of only require $300-400 down which is really not that much and worth taking the risk. Even a $1000 is not all that much, if the rate is good, especially when you considering how quickly you can make that grand go to $200 bucks and leave it at that balance for a while.

Also with little amounts like that, you would put it on your credit card, which woudl be easier to reclaim if the flight school went out of business.
A couple of thousand is fine.

But if they ask you for $10,000+ up front before you even touch an airplane, it should raise your caution flag.
Does FSA make you deposit taht much money?

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If I remember correctly, there was a $1000 deposit after you signed the contract. After that, it's up to you how much you keep on account. You are required to have a minimum of $300 to stay in "Fly" status, but anything over that and you're cool. I usually put about $2500 in at a time and keep the rest in a savings account (with interest). Keeps all involved happy. As a bonus, I run all the money through my Sony credit card and get Sony points. I'm hoping to get one of those cool Clie PDAs by the time I'm done here.

I just want to introduce myself, My name is Tommy and I have been an "observer" of this site since about July '01. I am now waiting on what I hope is a loan approval from Sallie Mae to begin my flight training at an FBO here in the Memphis,TN area. I am 24 years old and just got married in Nov. 02. I was curious after reading some of these posts. Is Sallie Mae a safe and reliable source for a loan. All the paperwork I have read over seems pretty good. The FBO will only take money out of the account as I progress through training. I was not quoted a "set price" but an estimate of approximate costs. I am going all the way CFI, Inst., ME, Com. and any, if any unused money would be sent back to Sallie Mae. Any info would be appreciated!
"keeping my fingers crossed"